ETF stands for “exchange traded fund”. An ETF is a weighted portfolio, managed by a financial institution and traded like a stock. When you buy a share in an ETF, you may earn dividends, if the portfolio contains dividend paying stocks, or you may benefit from a an upward price movement if the components of the EFT do well.
Not all ETF’s are composed of long stock. There are currency ETF’s, short shares ETF’s, and treasury bond ETF’s, as well as others with more complex financial strategies. However, the majority of ETF’s revolve around a set of stocks centered on a theme. Here are a few ETF’s that show all the signs of being a good investment.
0. iShares FTSE NAREIT Mortgage REITs (stock symbol REM). This ETF, based on the home mortgage industry, is an excellent contrarian bet for today’s beat-down financial sector. With a low price earnings ratio, investing in this ETF could lead to excellent returns.Health
1.Shares Emerging Cancer (HHJ). This ETF has holdings in several pharmaceutical companies, including Progenics, Cytokinetics, Marshall Edwards, and Immunogen. While any one of the companies in this ETF would be a risky buy, the ETF itself is an intriguing investment. As our population ages, cancer and related illnesses become a growing economic and social concern. At least some of the companies working on cancer cures will be wildly successful. With a few shares of HHJ, the odds are good that you could cash in on the success of some of its components, while offsetting the risk of holding any one of them.
2.Focus Shares ISE Homebuilders’ Index (SAW). Another great contrarian bet, this ETF has stock in several homebuilding companies. Like REM, SAW has an attractive price earnings ratio. With the home building sector looking dismal, now is a great time to get in on the ground floor. SAW just might be the tool you need to construct your portfolio on a solid foundation.
3.SPDR S&P international dividend (DWX). This ETF will provide instant diversity to your portfolio. Buy a few shares of DWX, and you will have dividend paying investments from around the world. By spreading your investments out geographically, you will not see your finances depending only on the wellbeing of one country or region. Like sector diversity, geopolitical diversity is a necessity for a stable portfolio.
4.WisdomTree Europe High-Yeilding Equity (DEW). Unlike DWX, DEW contains stocks poised for growth. They may not pay the same high dividends as the stable, established companies offered in DWX, but they have a lot of room for improvement. Like HHJ, DEW contains many stocks which would, considered individually, look a little risky. By investing in the ETF instead of the individual stocks, you spread your risk and make it less likely that the failure of any one company will hurt your finances. You still preserve your ability to benefit from these promising companies.